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Retail’s undeniable 
interconnectedness

BY Rob Eder

“It’s actually an illusion that those boxers are separate entities. The separate entities are just the way we choose to perceive them. The boxers, you, me — we’re all part of the same quantum field. Think of the two boxers as ocean waves or currents of air — two tornadoes, say. They appear to be two separate things, but they’re not. Tornadoes are just wind. The wind stirred up in different directions. The fact is nothing is separate. Everything is connected. The shapes we see exist only in our own consciousness.” — John Schwinn (Hal Holbrook), “The Sopranos,” Episode 69: “The Fleshy Part of the Thigh”


As I stood on the top floor of Duane Reade’s new flagship store at 100 Broadway, looking out the enormous windows onto the Canyon of Heroes below, it occurred to me that there was a certain, undeniable interconnectedness between the excitement that was occurring in that store (see page 4) and many of the other stories we have been following at DSN these days. 


Take this issue, for instance: the sudden explosion in loyalty card activity among retailers and the emergence of the health-and-wellness guide, who is helping to tie together the front-end of the store with the pharmacy in a way that creates a bona fide customer experience around health and wellness. We have been reporting on these stories as separate events and even trends in themselves, when in fact they are all part of the same giant soup of transformative concepts and best practices that are bumping up against each other in this quantum field we define as retailing. We analyze them as separate events, but in reality they are all connected. 


So, Duane Reade opens a second flagship store within a few blocks of the one it opened at 40 Wall St., roughly one year ago. Like so many of Duane Reade’s stores, you can walk from one store to the other in the span of about two minutes. Yet, there is little, if any, cannibalization. They serve different customers. 40 Wall St. is literally across the street from the New York Stock Exchange, and the streets tucked in between it and the South Street Seaport to the East and the Staten Island Ferry to the South are lined with high-end residential properties — it’s a special kind of food desert. There are no supermarkets, but it’s not like anybody living down there is broke either. 100 Broadway serves a mix of local workers and a high volume of tourists. 


Those differences play out in the merchandise and offerings in each store. The new store at 100 Broadway doesn’t have the full Look Boutique with any of the high-end services featured at 40 Wall St., like the Essie nail bar or the Ramy brow bar. It also doesn’t have the huge assortment in grocery items that 40 Wall St. has, but it’s testing other in-and-out businesses, like fresh salads, a barista cafe and a soup bar.


This isn’t something new. Duane Reade has been doing this successfully for the past few years as it has reinvented what people have come to expect of the typical drug store shopping experience. It stood that concept on its head and in fairness, was the incubator for Walgreens’ broader “Health and Daily Living Store” concept that it will roll into stores all across America in the months ahead. 


The vision that created the Health and Daily Living Store concept was shaped from the learnings from Duane Reade’s loyalty card program. It informs what they put in the stores and allows them to tailor each store to the customers that shop there. Loyalty cards don’t just enable customized offers; they also enable customized shopping experiences — stores merchandised for the customers that shop there. 


Sometimes these stories all seem like separate occurrences — a loyalty card over here, a new store opening over there. But standing on the top floor of Duane Reade’s newest store, it’s clear that all of these things are really connected. It’s our minds that draw the lines of distinction.


Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News, DSN Collaborative Care, and Specialty Pharmacy magazines. You can contact him at [email protected].

MORE ARTICLES FROM ROB EDER >

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Begin the battle for the pharmacy patient

BY Michael Johnsen

Prepare to roll up your sleeves, because the battle for the ESI patient has only just begun. While Wall Street is busy calculating the earnings-per-share impact this will have on all relevant parties (at press time, Walgreens’ shares had consistently hovered around the $35 range, up almost $4 in the week following the announcement), the business of pharmacy retailing will return to block and tackle mode.


Filling prescriptions may be becoming a more highly commoditized business every day, but that pharmacy patient still holds tremendous value. And beginning Sept. 15, CVS, Rite Aid and all others who targeted Walgreens patients out of this dispute will be fighting to keep them while Walgreens makes a concerted effort to win them back.


And what does that mean? It means the inherent pharmacy value proposition is going to be hyped by all of the major players to the “nth” degree. Walgreens is launching its loyalty card in September, so the Chicago-based retailer already had planned to kick its marketing up another notch. 


And Rite Aid already may have something in the works for its very much successful Wellness+ loyalty program. Analysts in June attempted to tease out what those plans were during Rite Aid’s last conference call, but Rite Aid’s John Standley declined to reveal his hand: “We can’t give away all of our secrets.”


But pharmacy’s secret sauce will share many of the same ingredients across all of the chains, including ever-evolving patient interaction/interception programs to help mitigate noncompliance and improve outcomes. There’s also immunizations, a healthcare offering that has fast become a staple across retail pharmacy.


And now loyalty cards (see story, p. 6). Between CVS’ ExtraCare card, Rite Aid’s Wellness+ and Walgreens’ yet-to-be-unveiled card that surely will benefit from its recent Alliance Boots relationship, patients will be given a host of reasons to visit their pharmacy come September.

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Health guides: 
Personalizing customers’ health-and-wellness experience

BY Michael Johnsen

Incorporated into the new store formats currently being rolled out by both Walgreens and Rite Aid is a new store associate position with the primary function of proactively engaging customers in the OTC aisle. Walgreens calls them Health Guides; Rite Aid calls them Wellness Ambassadors.

But whatever you call them, these associates are both raising the bar in terms of the retail pharmacy shopping experience — helping to create an actual customer experience in health and wellness — and establishing a gateway to the pharmacist and the growing number of health services available through the pharmacy (e.g., medication therapy management, disease-state counseling, immunizations, weight loss and smoking cessation).


And if ever there was a time to shine a light on all that retail pharmacy can bring to bear in helping to manage health, it’s now. Retail pharmacy faces increasing margin pressure from third-party payers and narrowing PBM pharmacy networks. And that’s today. With healthcare reform expected to provide insurance coverage to an incremental 32 million patients in 2014, that pressure on dispensing margins will only grow more intense.


That’s just one pressure point. The ubiquity of smartphones and tablets — 79% of Americans currently shop using one or the other, according to a recent Nielsen survey — provides ready access to online retail, and it is taking price, convenience and choice out of the equation, leaving only shopping experience as the key point of difference across an increasingly commoditized prescription business and a generally homogenized front-end mix.


“The biggest pressure in retailing today and in the future is going to be from online,” said Todd Hale, Nielsen SVP consumer and shopper insights. “So retailers need to think about what do they do to make that experience in their stores unique and different?” It’s happening across all sectors — JCPenney is looking to leverage mobilized checkout capabilities that will liberate associates to better serve shoppers; Trader Joe’s has employees who are experts on certain culinary subjects; and Giant Eagle has deployed an in-store dietitian for shoppers to consult.


“If you think about the drug format in particular, the shopper base today is typically [made up of ] the kind of people who are more likely to have face-to-face, one-on-one conversations, certainly the older shoppers,” Hale said.


Conversely, one positive factor driving the need for more consumer healthcare touch points, especially in the self-care aisles, is healthcare economics. With the rise in healthcare costs and the transitioning of some of that cost from payers to the end user, “informed people are saying, ‘I better take responsibility for my health,’” said Michael Feuer, founder of Max-Wellness.


The fact is, these health-and-wellness “guides” or “ambassadors” are personalizing pharmacy retailing. And while they aren’t in the self-care aisles to make product recommendations, they do serve as a point of entry to the growing number of services becoming available at retail pharmacy, including vaccinations and a growing number of wellness services.


They’re walking, talking and smiling pharmacy service billboards that are not only helping to improve the patient experience, but also are helping to improve store performance. Rite Aid last month touted its new Wellness format as a promising concept around which the company can grow. The whole format offering — from the fixtures to expanded product selection, from additional clinical pharmacy services to the Rite Aid Wellness Ambassadors — “all those changes combined are really giving us a positive sales trend,” said Robert Thompson, Rite Aid EVP pharmacy. “We’re getting great feedback from our customers. … Wellness Ambassadors have improved our overall ability to help customers get the quality information they need and receive advice or other patient services from our pharmacists.”


On top of highlighting pharmacy services, health-and-wellness ambassadors are helping drive more margin-friendly front-end sales as they provide customers with access to information on health, wellness and beauty products. And they could become a key cog in the new OTC switch model that the Food and Drug Administration is considering by serving to direct traffic toward the appropriate self-diagnostics tools or, again, a consultation with the pharmacist.

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